How to calculate and pay tax on cryptocurrency in Russia correctly?

Since January 1, 2021, cryptocurrency has been recognized as property on the territory of Russia. This allows you to formally conclude deals with her. Russians have such an opportunity thanks to the law «On financial digital assets», which entered into force at the beginning of this year.

However, the document prohibits the use of cryptocurrencies as a means of payment, writes RBC Crypto.

In early August, it became known that Rosfinmonitoring ordered the creation of a module for monitoring cryptocurrency transactions. One of its tasks is to analyze the behavior of market participants in order to identify them. For Russians who conduct cryptocurrency transactions, this is another signal that the state is taking control of the cryptocurrency sphere, said Efim Kazantsev, a teacher at the Moscow Digital School.

«Taxes on cryptocurrency must be paid without any warning, since this is provided for by the current Russian legislation,» the expert added.

Some entrepreneurs, taking advantage of the fact that cryptocurrency is de facto not regulated by Russian laws, have already begun to pay salaries in digital assets, says Yuri Brisov, a member of the Commission on the Legal Support of the Digital Economy of the Moscow Branch of the Russian Lawyers Association. According to him, Rosfinmonitoring will be able to monitor these and other illegal operations with cryptocurrencies that violate the law «On CFA».

“Tracking operations in cryptocurrency is correct. This is not new, it is done in other countries. Illegal tax evaders should think about it, ”Brisov said.

According to the lawyer, the problem lies precisely in the fact that the use of cryptocurrency as a means of payment is prohibited in Russia. If digital assets could be used for payment, then in this case it is possible to establish clear KYC / AML criteria for exchanges, withdraw funds to a bank account and calmly pay taxes, Brisov explained.

How to legally use cryptocurrency in Russia?

Cryptocurrency transactions are capable of generating income that must be included in the taxable base. For example, when selling digital assets for fiat currency, income is generated that can be measured in monetary terms, which means it is potentially taxable, explained Eduard Davydov, partner of NOA Circle Russia.

In the explanations of the Ministry of Finance, it is said that the tax base for personal income tax on transactions for the purchase and sale of cryptocurrencies is determined in rubles as the excess of the total amount of income received by the taxpayer in the tax period from the sale of cryptocurrency over the total amount of documented expenses for its acquisition, the expert noted.

“It follows from this that when receiving income from the sale of cryptocurrency, it is necessary to independently calculate personal income tax and submit a tax return (form 3-personal income tax) ,” added Davydov.

The current Russian legislation does not provide for special responsibility specifically for situations with cryptocurrency, Kazantsev explained. According to him, responsibility for tax evasion will come according to general rules. These are fines and penalties provided for in the Tax Code of the Russian Federation, as well as Articles 198 and 199 of the Criminal Code of the Russian Federation, which provide for various types of criminal liability, including imprisonment for a maximum of 6 years, the Moscow Digital School teacher warned.

Instructions for paying taxes on cryptocurrency

According to Davydov, at the moment there are no special rules for taxation of transactions with cryptocurrency in Russia, due to which the declaration of applicable taxes should be made in a general manner:

  • Step 1. For the reporting period (annually until April 30), all income received from the sale of cryptoassets should be summed up . To do this, you need to download the available reports on exchanges, exchangers, p2p platforms, as well as statements from bank cards and / or accounts with which you purchased and sold cryptocurrency;
  • Step 2. The income received from each crypto-asset must be correlated with the expense that you incurred to acquire it in the same amount, that is, the unrealized part of the currency does not need to be included in the calculation. All calculations must be made in rubles. If you sold and / or bought cryptocurrency on the exchange for foreign currency, then you should recalculate income and expenses twice according to the cross rates on the dates of the transactions until you finally get the total in rubles;
  • Step 3. For those positions where the value of profit is greater than zero, you must fill out a declaration in the form of 3-NDFL. This can be done in several ways, all of them are described on the official website of the tax office: nalog.gov.ru. When filling out the declaration, there are a number of important points. Taking into account the emerging practice of the circulation of cryptocurrencies, a sale, for example, of Bitcoin, should be declared as a sale of “other property” ;
  • Step 4. According to the results of a desk audit by the tax authority of the submitted declaration ( the result can be found in the personal account of the taxpayer ) – to pay the amount of tax approved by the tax authority.

It should be borne in mind that in the absence of documentary evidence of the purchase of a cryptocurrency (for example, in the case of a purchase «on hand» for cash), the tax authorities may refuse to account for the costs of its acquisition for personal income tax or other applicable taxes, that is, tax will be levied on the entire the amount of the sale of cryptocurrency, the partner of NOA Circle Russia warned.

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